Financial Rewards Membership/seniority based rewards Basically, the pay and benefits you get for working, Examples - fixed pay, employee benefits, paid leave Advantages - minimise stress of insecurity, reduces turn over, attract employees, think of good base pay for mining attracting employees to come, but doesn't motivate them to do well. Disadvantages - doesn't really motivate people, having a pay may stop poor performers leaving, golden handcuffs also don't motivate as they promote continuous over performance. Think of military super, you stay just to get the super. Job status rewards The higher the job status, the better the pay Examples - promotion-based pay increase, status-based increases Advantages - motivates people to get promoted, minimises pay discrimination as there is equity at levels of business. Disadvantages - encourages hierarchal bureaucracy. So employees get more done to achieve higher status, some employees can hoard resources. Think of Selina's boos keeping her there, just so he can get promoted. Competency based Rewards Having a pay structure based on the skills you have. So must have S123 to get level 9E paygrade. Motivates employees to learn new skills Increases employee adaptability to embrace new practices - new procedure comes in, employees will learn to get paid. Productivity increases as employees increase skills with procedures. There can be a high cost for training for employees to learn new tasks. Competency definitions can be misleading, and employees can feel unfair done by. Competencies can be subjective. performance based Rewards individual Rewards - individual bonuses for accomplishing a task or meeting performance goals. Think of commission for real estate agents or volume of calls dealt with Examples - stock options, profit sharing, commissions, merit pay Advantages - motivates task performance Garnishing plan - calculates bonuses from a team cost saving. Save $ for the week, its divided up amongst employees. It encourages team dynamics, knowledge sharing and pay satisfaction. Its also good as the team are in control, so they aim for reduced costs and labour efficiency.
Improving reward effectiveness Performance based rewards discourage creativity. If you are successful in meeting 20 good calls, you have no incentive for implementing a difference method. Reward systems do motivate employees, but only under the right conditions. Linking rewards to performance Where subjective measures of performance are necessary, companies should rely on multiple pieces of info. Rewards should be applied soon after performance occurs, so employees experience positive emotions when they receive the reward. Performance reviews are stressful, morale sapping and dysfunctional that become political arenas. Rating employees also distorts the complexity of performance, a 3/5 in customer service may hide good attributes like empathy for customers, knowledge of service etc. Perceptual biases occur, stereotyping and attribution error - you aren't formally educated so you must be shit at writing and processing forms. Ensuring rewards are relevant Need to align rewards with performance within employees' control - Executives get bonus for overall company performance - Miners get bonuses on production and safety The more 'line of sight' an employee has